QUASI-CONTRACTS
unauthorized contract would apply.
ORAL RECITATIONS:
1. What are quasi contracts?
Quasi contracts are lawful voluntary and unilateral
acts which generally requires a person to reimburse
or compensate another in accordance with the
principle that no one shall be unjustly enrich or
benefit at the expense of another.
2. Give two examples of quasi contracts?
1.) Negotiorum Gestio - arises when a person, without
the express or implied authority of, or opposition
from, the owner of a business or property which is
neglected or abandoned, takes charge of the agency
or management thereof.
The ratification of the management by the owner of
the business produces the effects of an express
agency, even if the business may not have been
successful.
2.) Solutio Indebiti - is a quasi-contract that arises
when the person is obliged to return whatever was
received by him through error or mistake received
by him although there was no right to demand it.
1. It requires that there must be a receipt of
something
2. There was no right to demand it.
3. There was undue delivery. The undue
delivery was because of mistake or by
either by the fact or of law.
When the payment was not by mistake or voluntary but
was made because of the coercive process of the writ of
execution then the concept of solution indebiti will
not apply.
Example of Solution Indebiti;
1. Erroneous payment of interest not due.
2. Erroneous payment of rentals
3. Taxes erroneously given
3.) What are the basis of quasi contrasts?
1. No one must unjustly enrich himself at
another’s expense.
2. If one benefits, he must reimbursed
3. Justice and equity.
4.) What are the essential requisites of negotiorium
gestio?
1. There must be no meeting of minds
2. There is taking charge of another’s property or
business
3. The property or business must have been
abandoned or neglected. Otherwise, if it is not
abandoned or neglected the rule on
4. The officious manager must not have been
expressly authorized. Otherwise, what would
apply is the rule on agency.
5. The officious manager or gestor must voluntary
taking charge. That is there must be no vitiated
consent or error in taking the property or the
business.
5.) What is the degree of care in officious manager?
The degree of care of the officious manager is the
Diligence of a good father of a family.
Hence, a gestor is liable for the acts of negligence of
his employees. However, his liability for damages
may for certain cases be mitigated.
6.) When is the officious manager liable for fortuitous
event?
(1) If he undertakes risky operations which the
owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of
the owner;
(3) If he fails to return the property or business
after demand by the owner;
(4) If he assumed the management in bad faith.
7.) What are the causes for extinguishment for the
officious manager?
(1) When the owner repudiates it or puts an end
thereto;
(2) When the officious manager withdraws from
the management, subject to the provisions of Article
2144;
(3) By the death, civil interdiction, insanity or
insolvency of the owner or the officious manager.
8.) What is solutio indebiti?
Solutio indebiti is a quasi-contract that arises when the
person is obliged to return whatever was received by
him through error or mistake received by him although
there was no right to demand it.
1. It requires that there must be a receipt of
something
2. There was no right to demand it.
3. There was undue delivery. The undue delivery
was because of mistake or by either by the fact
or of law.
When the payment was not by mistake or voluntary but
was made because of the coercive process of the writ of
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 execution then the concept of solution indebiti will objections of the owner, he shall be liable to pay the
not apply. expenses incurred by the government.
6. Reimbursement of a possessor in good faith for the
Example of Solution Indebiti; necessary and useful expenses.
7. In small community a majority of inhabitants of age
1. Erroneous payment of interest not due. decided to have measures for protection against
2. Erroneous payment of rentals lawlessness, fire, flood, storm or other calamity,
3. Taxes erroneously given anyone who objects and refuse to contribute
expenses but benefited shall be liable to pay his
share of said expenses.
4. What is the responsibility if two or more payees 8. Any person who is constrained to pay the taxes of
and there was been payment of what has not another shall be entitled to reimbursement from the
been due? latter.

As a general rule; the responsibility of two or

more payees, when there has been payment of
what is not due, is SOLIDARY.

5. What are the liabilities of a payee who accepts

for undue payment pay in bad faith?

The law provides that, if the payee who accepts

payment in BAD FAITH. He is liable for
interest or fruits and for damages in case of
fortuitous event. This is because the payee
assumes all risk having acted fraudulently
though damages may be mitigated.

6. What are the liabilities of a payee who accepts

for undue payment pay in good faith?

The law provides that, if payee who accepts in

GOOD FAITH. In case of impairment or loss,
his liabilities extend to what he benefited. In
case of alienation, the price is to be reimburse or
in case of credit the same should be assign.
ANTICHRESIS

What is Antichresis?

It is a contract by which the creditor acquires the

7. Give me other forms of quasi contracts?
1. Funeral expenses are borne by a third person
without the knowledge of those relatives who were
obliged to give support to the deceased. The said
relatives shall reimburse the third person if he
claims for reimbursement.
2. When a person obliged to support a child, an
orphan or other indigent person unjustly refuses to
give support and any third person furnish support
has the right to claim reimbursement to the person
who has obligation to give the support.
3. During accident or other cause, a person was
injured or seriously ill, he was treated, he shall be
liable to pay for the services of the physician or
other person aiding him unless the service has been
rendered out of pure generosity.
4. When during a fire, flood, storm or other calamity,
property was save from destruction by another
person without the knowledge of the owner, he is
bound to pay just compensation to the person who
save it.
5. When the government, undertakes necessary work
concerning health or safety regulations even over
right to receive the fruits of an immovable of his debtor, with
the obligation to apply them to the payment of the interest, if
owing, and thereafter to the principal of his credit.
What are its characteristics?
(1) an accessory contract because it secures the performance of
a principal obligation.
(2) a formal contract because it must be in a specified form to
be valid, i.e., “in writing.”
3. Nominate and consensual contract
Is it a real contract?
No. Under this contract, delivery of property is not a
requirement to be valid. Because Antichresis is not a real
contract.
Antichresis requires the delivery by the debtor of the property
given as security to the creditor.

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But such delivery is required only in order that the creditor may
receive the fruits and not that the contract shall be binding.
What do you mean by the words if owing?
The words “if owing” ( means - interest) reveal that it
is not essential that the loan should earn interest in
order that it can be guaranteed with a contract of
antichresis, there being nothing in the Code to show
that antichresis is only applicable to securing the
payment of interest-bearing loans.
On the contrary, antichresis is susceptible of
guaranteeing all kinds of obligations, pure or
conditional.
What is the difference of Antichresis and pledge?
(1) Antichresis refers to real property, while pledge, to personal
property; and
(2) Antichresis is perfected by mere consent, while pledge is
perfected by the delivery of the thing pledged; and
(3) Antichresis is a consensual contract, while pledge is a real
contract.
Both are similar in that the debtor loses control of the subject
matter of the contract.
What are the difference of Antichresis and real mortgage;
(1) In antichresis, the property is delivered to the creditor,
while in mortgage, the debtor usually retains possession of the
property;
(2) In antichresis, the creditor acquires only the right to receive
the fruits of the property, while in mortgage, the creditor does
not have any right to receive the fruits.
(3) In antichresis, it is expressly stipulated that the creditor
given the possession of the property and the same shall apply
only to the fruits for the purpose of the payment of interest if
owing, while in mortgage, there is no such obligation.
(4) In antichresis, the creditor cannot acquire by prescription the
lands surrendered to him by the debtor, the creditor is not a
possessor in a concept of an owner but a mere a holder of
possession hence their possession cannot claim dominion to the
land, while in a mortgage, there is no such obligation on the part
of the mortgagee.
Both are similar in that the subject matter is real property.
Like pledge and mortgage, antichresis gives a real and not
merely a personal right if it is registered in the Registry of
Property.
Can the contract of antichresis needs to in writing?
Yes. That is why the contract of antichresis is a FORMAL
CONTRACT because it requires that is should be in writing
otherwise it shall be void.
Even if the contract of antichresis is void but the principal
contract is valid.
What are the Obligations of the antichretic creditor.
The Antichretic creditor has two obligations;
(1) Payment of taxes and charges upon the estate.
(2) Application of the fruits of the estate.
What is the right of antichretic debtor to reacquire
enjoyment of property?
As a general rule; the property delivered stands as a
security for the payment of the obligation of the
debtor in antichresis. Hence, the debtor cannot
demand its return until the debt is totally paid.
However, if the creditor does not want to pay the taxes
and incur the expenses necessary for the preservation
and repair of the property , he may compel the debtor
to reacquire the enjoyment of the same except when
there is a contrary stipulation.
Can the creditor acquire ownership of the real estate in case
of nonpayment of debt?
No. If the debt is not paid, the creditor does not
acquire ownership of the real estate since what was
transferred is not the ownership but merely the
right to receive its fruits. A stipulation authorizing
the antichretic creditor to appropriate the property
upon the nonpayment of the debt within the period
agreed upon is VOID.
What are the remedy of the antichretic creditor?
The remedy of the antichretic creditor are;
(1) to bring an action for specific performance; or
(2) to petition for the sale of the real property as
in a foreclosure of mortgages under Rule 68 of the
Rules of Court.
3. The parties, however, may agree on an extrajudicial
foreclosure in the same manner as they are allowed
in contracts of mortgage and pledge.
FINANCIAL REHABILITATION AND INSOLVENCY
What is Insolvency?
Insolvency refers to the financial incapacity of the debtors to
pay their liabilities as they fall due in the ordinary course of
business or whenever their liabilities are greater than their
assets.
What is the term claims and what claims include?
Claim shall refer to all claims or demands of whatever
nature or character against the debtor or its property,
whether for money or otherwise, liquidated or unliquidated,
fixed or contingent, matured or unmatured, disputed or
undisputed, including, but not limited to;
(1) all claims of the government, whether national or
local, including taxes, tariffs and customs duties; and
(2) claims against directors and officers of the debtor
arising from acts done in the discharge of their functions
falling within the scope of their authority:
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 Provided, That, this inclusion does not prohibit the
creditors or third parties from filing cases against the
directors and officers acting in their personal capacities.
The claims must against the debtor or its property.
Thus, the rehabilitation court has no jurisdiction over
claims against debtor under the rehabilitation but not
over claims by the debtor against its own debtors or
against third party.
ANTICHRESIS

ART. 2132. By the contract of antichresis the creditor

acquires the right to receive the fruits of an immovable of his
What are the remedies under the law on FRIA? debtor, with the obligation to apply them to the payment of
the interest, if owing, and thereafter to the principal of his
Under the rehabilitation act, we have; credit. (1881)
1. Rehabilitation may be voluntary meaning its debtor
initiated. Or involuntary meaning creditor initiated What is Antichresis?
or pre-negotiated.
2. Out of court restructuring under section 83 It is a contract by which the creditor acquires the right
to receive the fruits of an immovable of his debtor, with the
3. Liquidation may be voluntary, or involuntary under
obligation to apply them to the payment of the interest, if owing,
sec. 91
and thereafter to the principal of his credit.
4. Petition for suspension of payment for individual
debtors. Characteristics of the contract.

(1) an accessory contract because it secures the performance of

a principal obligation. Manresa, however, believes that it is an
independent contract (see 12 Manresa 547.); and

(2) a formal contract because it must be in a specified form to be

valid, i.e., “in writing.”

3. Nominate and consensual contract –

Delivery of property not a requirement to be a valid

contract. Because Antichresis is not a real contract.

Antichresis requires the delivery by the debtor of the property

given as security to the creditor.

But such delivery is required only in order that the creditor may
receive the fruits and not that the contract shall be binding.

The contract does not cover the immovable but only its
FRUITS. It normally covers the fruits of the encumbered
property but the law gives the parties the freedom to stipulate
otherwise. The reduction of the amount fruits available to the
creditor does not vary the nature of the contract.

The words “if owing” (interest) reveal that it is not essential

that the loan should earn interest in order that it can be
guaranteed with a contract of antichresis, there being nothing in
the Code to show that antichresis is only applicable to securing
the
payment of interest-bearing loans.

On the contrary, antichresis is susceptible of guaranteeing all

kinds of obligations, pure or conditional.

Antichresis and pledge compared.

The distinctions are as follows:

(1) Antichresis refers to real property, while pledge, to personal
property; and

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(2) Antichresis is perfected by mere consent, while pledge is
perfected by the delivery of the thing pledged; and
(3) Antichresis is a consensual contract, while pledge is a real
contract.
Both are similar in that the debtor loses control of the subject
matter of the contract.
Possible Quiz:
Antichresis and real mortgage compared.
(1) In antichresis, the property is delivered to the creditor,
while in mortgage, the debtor usually retains possession of the
property;
(2) In antichresis, the creditor acquires only the right to receive
the fruits of the property, while in mortgage, the creditor does
not have any right to receive the fruits.
(3) In antichresis, it is expressly stipulated that the creditor
given the possession of the property and the same shall apply
only to the fruits for the purpose of the payment of interest if
owing, while in mortgage, there is no such obligation.
(4) In antichresis, the creditor cannot acquire by prescription the
lands surrendered to him by the debtor the creditor is not a
possessor in a concept of an owner but a mere a holder of
possession hence their possession cannot claim dominion to the
land, while in a mortgage, there is no such obligation on the part
of the mortgagee.
Both are similar in that the subject matter is real property.
Like pledge and mortgage, antichresis gives a real and not
merely a personal right if it is registered in the Registry of
Property.
ART. 2134. The amount of the principal and of the interest
shall be specified in writing; otherwise, the contract of
antichresis shall be void.
That is why the contract of antichresis is a FORMAL
CONTRACT because it requires that is should be in writing
otherwise it shall be void.
Even if the contract of antichresis is void but the
principal contract is valid.
ART. 2135. The creditor, unless there is a stipulation to the
contrary, is obliged to pay the taxes and charges upon the
estate. He is also bound to bear the expenses necessary for its
preservation and repair.
The sums spent for the purposes stated in this article
shall be deducted from the fruits.
Obligations of the antichretic creditor.
The creditor acquires, by virtue of the contract of antichresis, the
right to enjoy the fruits of the property delivered to him. (Art.
2132.)
This right carries two obligations;
(2) Payment of taxes and charges upon the estate.
(2) Application of the fruits of the estate.
ART. 2136. The debtor cannot reacquire the enjoyment
of the immovable without first having totally paid what he
owes the creditor. But the latter, in order to exempt himself
from the obligations imposed upon him by the preceding
article, may always compel the debtor to enter again upon
the enjoyment of the property, except when there is a
stipulation to the contrary.
Right of antichretic debtor to reacquire enjoyment of
property.
The property delivered stands as a security for the payment of
the obligation of the debtor in antichresis. Hence, the debtor
cannot demand its return until the debt is totally paid.
However, if the creditor does not want to pay the taxes and incur
the expenses necessary for the preservation and repair of the
property (Art. 2135.), he may compel the debtor to reacquire the
enjoyment of the same except when there is a contrary
stipulation.
ART. 2137. The creditor does not acquire the ownership of
the real estate for nonpayment of the debt within the period
agreed upon. Every stipulation to the contrary shall be void.
But the creditor may petition the court for the payment of
the debtor the sale of the real property. In this case, the
Rules of Court on the foreclosure of mortgages shall apply.
(1884a)
Remedy of creditor in case of nonpayment of debt.
If the debt is not paid, it is clear enough that the creditor does not
acquire ownership of the real estate since what was transferred is
not the ownership but merely the right to receive its fruits. (Art.
2132.) A stipulation authorizing the antichretic creditor to
appropriate the property upon the nonpayment of the debt within
the period agreed upon is void.
What is the remedy of the creditor?
The remedy of the creditor is;
(1) to bring an action for specific performance; or
(2) to petition for the sale of the real property as
in a foreclosure of mortgages under Rule 68 of the Rules of
Court.
The parties, however, may agree on an extrajudicial foreclosure
in the same manner as they are allowed in contracts of mortgage
and pledge.
Chapter 1
Quasi-Contracts
Art. 2142. Certain lawful, voluntary and unilateral
acts give rise to the juridical relation of quasi-contract
to the end that no one shall be unjustly enriched or
benefited at the expense of another. (n)
What is Quasi – contracts?
Quasi contracts are lawful voluntary and unilateral acts which
generally requires person to reimburse or compensate another in
accordance with the principle that no one shall be unjustly enrich
or benefit at the expense of another.
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What is the basis of quasi contracts?
4. No one must unjustly enriched himself at another’s
expense.
5. If one benefits, he must reimbursed
6. Justice and equity.
What are the two kinds of Quasi Contracts?
8. Negotiorum Gestio
9. Solutio Indebiti
Art. 2143. The provisions for quasi-contracts in
this Chapter do not exclude other quasi-contracts which may
come within the purview of the preceding article.
Section 1 — Negotiorum Gestio
What are the essential requisites of negotiorum Gestio?
6. There must be no meeting of minds
7. There is taking charge of another’s property or
business
8. The property or business must have been
abandoned or neglected. Otherwise, if it is not
abandoned or neglected the rule on
unauthorized contract would apply.
9. The officious manager must not have been
expressly authorized. Otherwise, what would
apply is the rule on agency.
10. The officious manager or gestor must voluntary
taking charge. That is there must be no vitiated
consent or error in taking the property or the
business.
Art. 2144. Whoever voluntarily takes charge of the
agency or management of the business or property of
another, without any power from the latter, is obliged to
continue the same until the termination of the affair and its
incidents, or to require the person concerned to substitute
him, if the owner is in a position to do so.
This juridical relation does not arise in either of these
instances:
(1) When the property or business is not neglected
or abandoned;
(2) If in fact the manager has been tacitly authorized
by the owner.
In the first case, the provisions of Articles 1317,
1403, No. 1 and 1404 regarding unauthorized contracts shall
govern.
In the second case, the rules on agency in Title X
of this Book shall be applicable. (1888a)
Art. 2145. The officious manager shall perform his
duties with all the diligence of a good father of a family, and
pay the damages which through his fault or negligence may
be suffered by the owner of the property or business under
management.
The courts may, however, increase or moderate
the indemnity according to the circumstances of each
case.
This pertains to the diligence required of the officious
manager or the gestor;
1. Diligence of a good father of a family. Hence, a
gestor is liable for the acts of negligence of his
employees. However, his liability for damages may
for certain cases be mitigated.
Art. 2146. If the officious manager delegates to
another person all or some of his duties, he shall be
liable for the acts of the delegate, without prejudice to the
direct obligation of the latter toward the owner of the
business.
The responsibility of two or more officious managers
shall be solidary, unless the management was assumed to
save the thing or business from imminent
danger.
Art. 2147. The officious manager shall be liable
for any fortuitous event:
(1) If he undertakes risky operations which the
owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of
the owner;
(3) If he fails to return the property or business
after demand by the owner;
(4) If he assumed the management in bad faith.
When is the officious manager liable in case of fortuitous
event?
(1) If he undertakes risky operations which the
owner was not accustomed to embark upon;
(2) If he has preferred his own interest to that of
the owner;
(3) If he fails to return the property or business
after demand by the owner;
(4) If he assumed the management in bad faith.
Art. 2148. Except when the management was assumed to
save the property or business from imminent danger, the
officious manager shall be liable for fortuitous events:
(1) If he is manifestly unfit to carry on the management;
(2) If by his intervention he prevented a more
competent person from taking up the management.
This pertains to other instances when he is liable for fortuitous
event.
Art. 2149. The ratification of the management by
the owner of the business produces the effects of an
express agency, even if the business may not have
been successful.
Art. 2150. Although the officious management may
not have been expressly ratified, the owner of the property
or business who enjoys the advantages of the same shall be
liable for obligations incurred in his interest, and shall
reimburse the officious manager for the necessary and useful
expenses and for the damages which the latter may have
suffered in the performance of his duties.
The same obligation shall be incumbent upon him
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when the management had for its purpose the prevention of
an imminent and manifest loss, although no benefit may
have been derived.
This pertains to the liabilities of the owner even if there is no
ratification;
1. Liability for obligation incurred in his interest
2. He has liabilities for necessary as well as useful
expenses and for damages.
Art. 2151. Even though the owner did not derive
any benefit and there has been no imminent and manifest
danger to the property or business, the owner is liable as
under the first paragraph of the preceding article, provided:
(1) The officious manager has acted in good
faith, and
(2) The property or business is intact, ready to
be returned to the owner.
Art. 2152. The officious manager is personally liable
for contracts which he has entered into with third
persons, even though he acted in the name of the owner, and
there shall be no right of action between the owner and third
persons. These provisions shall not apply:
(1) If the owner has expressly or tacitly ratified
the management, or
(2) When the contract refers to things pertaining
to the owner of the business.
This pertains to the extinguishment of the management.
Art. 2153. The management is extinguished:
(1) When the owner repudiates it or puts an end
thereto;
(2) When the officious manager withdraws from
the management, subject to the provisions of Article
2144;
(3) By the death, civil interdiction, insanity or
insolvency of the owner or the officious manager. (n)
Section 2 — Solutio Indebiti
Art. 2154. If something is received when there is
no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises. (1895)
What is solution Indebiti?
Solutio Indebiti is a quasi that arises when the person is obliged
to return whatever was received by him through error or mistake
received by him although there was no right to demand it.
10. It requires that there must be a receipt of something
11. There was no right to demand it.
12. There was undue delivery. The undue delivery was
because of mistake or by either by the fact or of
law.
When the payment was not by mistake or voluntary but was
made because of the coercive process of the writ of execution
then the concept of solution indebiti will not apply.
Example of Solution Indebiti;
13. Erroneous payment of interest not due.
14. Erroneous payment of rentals
15. Taxes erroneously given
Art. 2155. Payment by reason of a mistake in the
construction or application of a doubtful or difficult
question of law may come within the scope of the preceding
article. (n)
Art. 2156. If the payer was in doubt whether the
debt was due, he may recover if he proves that it was
not due. (n)
Art. 2157. The responsibility of two or more payees,
when there has been payment of what is not due,
is solidary. (n)
Art. 2158. When the property delivered or money
paid belongs to a third person, the payee shall comply
with the provisions of Article 1984. (n)
This pertains to a rule when property belongs to a third person.
So you relate this to article 1984. So the depositary cannot
demand that the depositor proves his ownership of the thing
deposited. Nevertheless, should be discovered that the thing has
been stolen or who is the true owner is. He must advise the latter
of the deposit. If the owner in spite of such information does not
claim it in a period of one month the depositary shall be relieved
of all responsibilities by returning the thing deposited to the
depositor, if the depositary has reasonable grounds to relieved
the thing that has been duly acquired by the depositor the former
may return the same.
Art. 2159. Whoever in bad faith accepts an undue
payment, shall pay legal interest if a sum of money is
involved, or shall be liable for fruits received or which
should have been received if the thing produces fruits.
He shall furthermore be answerable for any loss
or impairment of the thing from any cause, and for
damages to the person who delivered the thing, until it
is recovered. (1986a)
this pertains to the rule if the payee who accepts payment in bad
faith. The payee is liable for interest or fruits and for damages in
case of fortuitous event. This is because the payee assumes all
risk having acted fraudulently though damages may be
mitigated.
Art. 2160. He who in good faith accepts an undue
payment of a thing certain and determinate shall only
be responsible for the impairment or loss of the same
or its accessories and accessions insofar as he has
thereby been benefited. If he has alienated it, he shall
return the price or assign the action to collect the sum.
(1897)
This pertains to the rule that payee who accepts in good faith. In
case of impairment of laws liabilities to the extend to benefit and
in case of alienation the price is to be reimburse or in case of
credit the same should be assign.
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Art. 2161. As regards the reimbursement for improvements Art. 2169. When the government, upon the failure of any
and expenses incurred by him who unduly received the person to comply with health or safety regulations
thing, the provisions of Title V of concerning property, undertakes to do the necessary work,
Book II shall govern. (1898) even over his objection, he shall be liable to pay the expenses.

Art. 2162. He shall be exempt from the obligation

to restore who, believing in good faith that the payment was
being made of a legitimate and subsisting claim, destroyed
the document, or allowed the action to prescribe, or gave up
the pledges, or cancelled the guaranties for his right. He who
paid unduly may proceed only against the true debtor or the
guarantors with regard to whom the action is still effective.
(1899)
Art. 2170. When by accident or other fortuitous event,
movables separately pertaining to two or more persons are
commingled or confused, the rules on coownership shall be
applicable.
Art. 2171. The rights and obligations of the finder of lost
personal property shall be governed by Articles
719 and 720.

Art. 2172. The right of every possessor in good faith to

Art. 2163. It is presumed that there was a mistake
in the payment if something which had never been due or
had already been paid was delivered; but he from whom the
return is claimed may prove that the delivery was made out
of liberality or for any other just cause. (1901)
This pertains to when mistake is presumed;
What are other forms of Quasi contracts?
reimbursement for necessary and useful expenses is
governed by Article 546.
Art. 2173. When a third person, without the knowledge
of the debtor, pays the debt, the rights of the former are
governed by Articles 1236 and 1237.
Art. 2174. When in a small community a majority of the
inhabitants of age decide upon a measure for protection
against lawlessness, fire, flood, storm or other calamity, any
one who objects to the plan and refuses to contribute to the
expenses but is benefited by the project as executed shall be
liable to pay his share of said expenses.

Section 3 — Other Quasi-Contracts Art. 2175. Any person who is constrained to pay the taxes of
another shall be entitled to reimbursement from the latter.
Art. 2164. When, without the knowledge of the person
obliged to give support, it is given by a stranger, the latter
shall have a right to claim the same from the former, unless
it appears that he gave it out of piety and without intention
of being repaid. (1894a)

Art. 2165. When funeral expenses are borne by a third

person, without the knowledge of those relatives who were
obliged to give support to the deceased, said relatives shall
reimburse the third person, should the latter claim
reimbursement. (1894a)

Art. 2166. When the person obliged to support an orphan, or

an insane or other indigent person unjustly refuses to give
support to the latter, any third person may furnish support
to the needy individual, with right of reimbursement from
the person obliged to give support.

The provisions of this article apply when the father or

mother of a child under eighteen years of age unjustly
refuses to support him.

Art. 2167. When through an accident or other cause a person

is injured or becomes seriously ill, and he is treated or
helped while he is not in a condition to give consent to a
contract, he shall be liable to pay for the services of the
physician or other person aiding him, unless the service has
been rendered out of pure generosity.

Art. 2168. When during a fire, flood, storm, or other

calamity, property is saved from destruction by another
person without the knowledge of the owner, the latter is
bound to pay the former just compensation.

8
Financial Rehabilitation and Insolvency Act (FRIA) of 2010

AM No. 12-11

AM No. 15 -04 - 03

What is Insolvency?

Insolvency refers to the financial incapacity of the debtors to

pay their liabilities as they fall due in the ordinary course of
business or whenever their liabilities are greater than their assets.

So insolvent covers both bankruptcy and liquidity.

The debtor’s assets must not at fair valuation to pay his debts.

What is the term claims and what claims include?

So under the rules of procedures;

Claim shall refer to all claims or demands of whatever nature or

character against the debtor or its property, whether for money
or otherwise, liquidated or unliquidated, fixed or contingent,
matured or unmatured, disputed or undisputed, including, but not
limited to;
(1) all claims of the government, whether national or local,
including taxes, tariffs and customs duties; and
(2) claims against directors and officers of the debtor arising
from acts done in the discharge of their functions falling within
the scope of their authority: Provided, That, this inclusion does
not prohibit the creditors or third parties from filing cases
against the directors and officers acting in their personal
capacities.

The claims must against the debtor or its property. Thus, the
rehabilitation court has no jurisdiction over claims against debtor
under the rehabilitation but not over claims by the debtor against
its own debtors or against third party.

What are the remedies under the law on FRIA?

Remedies;

Under the rehabilitation act, we have;

5. Rehabilitation may be voluntary meaning its debtor

initiated. Or involuntary meaning creditor initiated or
pre-negotiated.
6. Out of court restructuring under section 83
7. Liquidation may be voluntary, or involuntary under sec.
91
8. Petition for suspension of payment for individual
debtors.